Goldman Sachs downgrades US recession risk following Trump tariff pause announcement

Goldman Sachs economists have rescinded their US recession forecast following President Trump's announcement of a 90-day pause on most new tariffs. However, citing persistent uncertainties, the bank maintained an elevated 45% probability of economic recession within the year.

Trump's decision to suspend additional tariffs triggered a sharp stock market rally. However, analysts note that existing base tariffs and sectoral restrictions remain intact, continuing to weigh on GDP growth. Considering this, the 2025 US economic growth forecast has been revised downward to 0.5%.

JPMorgan Chief Economist Michael Feroli stated that while recession risks have diminished, the potential for an economic downturn persists. He noted that the cumulative tariff increases implemented since Trump took office now represent a $300 billion tax burden.

Despite the temporary tariff pause, analysts at major financial institutions, including Citigroup and JPMorgan, maintain a cautious outlook for the US economy. They warn that risks of economic slowdown and persistent inflation remain relevant.